Yesterday Range Resources, the very first E&P to sink a Marcellus well (in 2004), released its 4Q17 and full 2017 results.
Read More “Range Resources Update: Dennis Degner Promoted, $333M Profit”
Last week MDN editor Jim Willis attended Hart Energy’s Marcellus-Utica Midstream conference in Pittsburgh (a series of stories are coming this week from that event). One of the stray comments Jim heard at the event was this: The chief rival or competitor to the Marcellus with respect to natural gas production is not, as you might assume (we sure did) the Haynesville Shale in Louisiana. No. The chief competitor, producing more and more volumes of natgas, is…the Permian! That’s right, an oil play! Why? When you drill for oil, you get other hydrocarbons out of the ground along with the oil. Primarily methane, or natural gas. It’s called “associated gas.” Even though most of what comes out of a Permian well is oil and not gas, because there are so darned many oil wells in the Permian (with more being drilled all the time), the total volume of gas coming from the Permian is going up, dramatically. The problem is, some Marcellus/Utica gas heads to the Gulf Coast to be used by petrochemical companies or to be exported. However, gas produced right there in the region is less expensive to get to market (shorter distance), so that Permian-sourced gas is competing, and increasingly crowding out, Marcellus/Utica gas. Investors have noticed and have, in a sense, “punished” some of the biggest of the big Marcellus/Utica producers by selling their shares, leading to a loss in share value. Among the hardest hit have been Southwestern Energy, Gulfport Energy, and Range Resources. The stock price for those three companies is down, since Jan. 1st, 33%, 30% and 25% respectively. A Bloomberg article says the stocks for those companies have been “mauled.” Indeed. Here’s some insight into how the Marcellus/Utica is increasingly going up against the oil giant Permian Basin, sometimes getting mauled…
Read More “Clash of the Titans: PA Marcellus Gas Competes with TX Permian”
Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
Read More “Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?”
Yesterday Range Resources released a pair of press releases. One outlines a high level overview for what the company will spend in 2018 and beyond, for the next five years. The other release trumpets Range’s “proved reserves.” As for 2018, Range says they are reducing the amount of money they will spend to drill this year versus what they spent last year. Range previously said they would spend $1.15 billion this year. That’s now been reduced to $941 million. Last year Range spent $1.27 billion, so this year’s spending is down 26% over last year. That’s a pretty hefty decrease. The good news is that Range will spend 80% of this year’s budget on drilling in the Marcellus, mainly in southwestern Pennsylvania. Even though Range will spend and drill less this year, they predict production will grow another 25%. As for the 5-year outlook, Range says almost all growth will come in the Marcellus (not the Louisiana Haynesville, their other drilling location). Range still has some 3,200 locations where they can drill new wells. Range CEO Jeff Ventura says shale has entered a “new era” of shale development where companies (like Range) have “captured the most prolific resources” and will now switch to focus on returns for shareholders. Translation: We won’t be drilling as much as we did in the past so we can concentrate on bottom line profitability. Which explains why Range is spending less this year than last. In the release Range calls the Marcellus its “flagship asset” and clearly signals the company will keep its focus here, in our region. As for proved reserves (how much gas and oil is in the ground, retrievable with today’s technology and at today’s costs), Range says proved reserves as of December 31 increased by 26% from the prior-year, now at 15.3 trillion cubic feet equivalent (Tcfe). That’s alotta gas! We have the Range announcements below, along with an updated PowerPoint slide deck chocked full of useful information…
Read More “Range Res. 2018 Budget & 5 Yr Outlook: Focus on SWPA Marcellus”
Yesterday MDN updated you on Eclipse Resources’ program of drilling looooong laterals–the horizontal part of shale wells (see Eclipse Res. 3Q17: Super-Laterals Proving to be Super Productive). Eclipse is the reigning champ, having drilled the three longest onshore horizontal wells–in the WORLD. Upward of 3.5 miles underground! All three of Eclipse’s record-breakers are Utica wells. However, Eclipse isn’t the only driller hopping on the long lateral bandwagon. In June, Range Resources reported drilling the longest Marcellus lateral well (see Range Resources Drills Longest Marcellus Well Ever – in Washington Co.). If you compare the lateral length of Range’s wells from 3Q17 with 3Q16, they are drilling laterals 90% longer than they were just one year ago! EQT and Antero Resources are also experimenting with longer laterals. All of which leads us to christen 2017, “the year of the longer lateral”…
Read More “Longer Laterals Major Trend in 2017 Marcellus-Utica Drilling”
Yesterday MDN received an email from subscriber Sandy R. who lives in southwestern PA. Her land is leased to Range Resources, and she recently read that Range “now has their own pipelines to carry Marcellus gas to better paying markets.” In our response to Sandy, we mentioned that although producers sometimes buy a share of a pipeline, they rarely own pipelines outright. More often they sign long-term (10-20 year) agreements with large midstream companies to reserve capacity along pipelines. We went looking for which pipelines Range might have reserved capacity on that are near where Sandy lives, and found two things that caught our attention. One is a recent statement from Range bragging (our word) about a strategy they put in place 10 years ago to get enough pipeline capacity to move Marcellus gas out of the region to better paying markets. The second thing is we located a list of major northeast pipeline projects with the pipelines Range has reserved capacity along highlighted in yellow. Cool! So below is an article mentioning some of the pipelines Range says will be a game-changer for them in the near-term, followed by that list of pipelines they have reserved capacity along…
Read More “Range Resources’ 10-Year Pipeline Strategy About to Pay Off”
Range Resources released its third quarter financial and operational update earlier this week. Range is one of the premier drillers in the Marcellus (and Utica) shale region. In fact, Range drilled the very first Marcellus well back in 2004. The Range update is full of interesting details. First and foremost, the company turned a profit of $112 million in 3Q17, contrasted to losing $361 million in the same period last year. That’s nearly half a billion dollar swing in one year. Impressive. Also impressive is that Range’s total production came a whisker away from 2 billion cubic feet equivalent per day–which is up 32% over the same period last year. During 3Q17 two Marcellus “super-rich” pads were brought on line. The wells on those pads had an average per well 24-hour initial production (IP) rate of 41.3 million cubic feet equivalent (Mmcfe) per day. Impressive. As part of the update, Range held a call with financial analysts to discuss company performance. As these types of calls usually do, this one had a Q&A at the end. One analyst asked if Range would be willing to sell some of it’s non-core assets in southwest PA. Range CEO Jeff Ventura said yes, the company would consider such a move, under the right kind of terms. Here’s the full update from Range…
Read More “Range Resources 3Q17: $112M Profit, Production Hits 1.99 Bcf/d”
Platts held their Appalachian Oil and Gas Conference in Pittsburgh earlier this week. One of the more interesting comments at the event came from Alan Farquharson, senior vice president of Range Resources. Farquharson gave an interview to a Platts reporter and said natural gas production in the Marcellus/Utica can’t continue its rapid increase indefinitely. Farquharson said drillers are going to hit “sweet spot exhaustion,” by which he means they will soon run out of Tier 1 locations to drill, requiring they branch into Tier 2 and Tier 3. As they drill in those other locations, well production will decrease, and along with it regional output will decrease. Range was the very first driller to sink a Marcellus well, back in 2004, so they know a thing or two about the play. When Range talks, everyone listens. Here’s more of Farquharson’s provocative comments from earlier this week…
Read More “Range Resources VP Says M-U Heading for “Sweet Spot Exhaustion””
Yesterday we brought you the “Top 10” drillers in southwestern Pennsylvania, as ranked by the number of permits issued (see Top 10 Drillers in SWPA, by Number of Permits Issued). Today we’re bringing you the Top 10 list of drillers by number of permits issued for the entire state of PA. As you might imagine, the picture statewide is quite a bit different from looking at only SWPA. Yes, some of the same companies are in both lists–but only three are in both lists (Range Resources, EQT and Rice Energy). Our Top 10 list is extracted from a list prepared by the (must read) Pittsburgh Business Times…
Read More “Top 10 Drillers in All of PA, by Number of Permits Issued”
Every now and again it’s fun to take a look at a “Top 10” list. Here’s one for you. How about a Top 10 List for drillers in southwestern PA, in Allegheny, Armstrong, Beaver, Butler, Clarion, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland counties. This Top 10 list ranks drillers by how many shale well permits they’ve been granted. The list is extracted from a Top 40 list prepared by the (must read) Pittsburgh Business Times. Can you guess which 10 drillers are in the Top 10? How about the Top 1? It may come as no surprise that Range Resources, the very first company to drill a Marcellus Shale well (in 2004), has received the most permits to drill in SWPA. Here’s the full Top 10 list, with some interesting extra details…
Read More “Top 10 Drillers in SWPA, by Number of Permits Issued”
Yesterday MDN brought you the news that Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011 (see Range & PA DEP Settle re Alleged Methane Leak at Lycoming Well). In June 2015, then-Secretary of the DEP, John Quigley, slapped Range with an $8.9 million fine–the largest such fine ever levied by the DEP (see PA DEP Slaps Range with Record $8.9M Fine for Methane Migration). The DEP said a Range well, drilled in 2011 in Lycoming County, PA, leaked methane since at least 2013 via an improperly cemented well casing, and the methane “contaminated the groundwater-fed wells of private water supplies, and a nearby stream.” Range and the landowner where the well is drilled said methane was in groundwater supplies long before Range drilled the well. Range fought the action tooth and nail, appealing the determination and fine to the PA Environmental Hearing Board. In May 2016, the DEP quietly dropped the fine and the case against Range (see PA DEP Drops $8.9M Fine Against Range Res. re Methane Migration). We thought that was THE END. But it wasn’t. On Monday of this week, both Range and the DEP filed paperwork with the Environmental Hearing Board (a special court set up to hear appeals of DEP decisions) requesting the matter now officially be closed and “settled.” We now have a copy of the settlement itself–and it shows the DEP will not extra one penny from Range over what they previously said should cost $8.9 million. Interesting. Antis like THE Delaware Riverkeeper, Maya van Rossum, are “dumbfounded” at the settlement. Below is a copy of the settlement paperwork and select anti reaction to it…
Read More “Range/DEP Lycoming Well Settlement: From $8.9M Fine to $0”
Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011. In June 2015, then-Secretary of the DEP, John Quigley, slapped Range with an $8.9 million fine–the largest such fine ever levied by the DEP (see PA DEP Slaps Range with Record $8.9M Fine for Methane Migration). Range’s enviro crime? Methane migration from a well in Lycoming County, PA. The DEP says the Range well, drilled in 2011, leaked methane since at least 2013 via an improperly cemented well casing, and the methane “contaminated the groundwater-fed wells of private water supplies, and a nearby stream.” Range and the landowner where the well is drilled say methane was in groundwater supplies long before Range drilled the well. Range fought the action tooth and nail, appealing the determination and fine to the PA Environmental Hearing Board (see PA DEP’s $8.9M Methane Migration Fine Appealed by Range Resources). In May 2016, the DEP quietly dropped the fine and the case against Range (see PA DEP Drops $8.9M Fine Against Range Res. re Methane Migration). We assumed that was the end of the matter. But alas, no. We now, finally, have an end. Both Range and the DEP filed paperwork with the Environmental Hearing Board (a special court set up to hear appeals of DEP decisions) requesting the matter now officially be closed and “settled.” The paperwork (copy below) does not say what the terms of the settlement are. Both Range and the DEP are being mum about the terms…
Read More “Range & PA DEP Settle re Alleged Methane Leak at Lycoming Well”
Findlay Township (Allegheny County, PA, west of Pittsburgh) has just signed a deal with Range Resources to allow drilling under (not on) the towns 61-acre Clinton Park. Terms of the deal: Findlay gets a $3,000 per acre signing bonus and when the gas begins to flow, an 18% royalty. That means Findlay will get a nice, fat check for $183,000 in the next 90 days. The lease has been a long time in coming. Town supervisors worked on a deal five years ago, but then drilling slowed down and the deal was “put on the shelf.” Range will actually drill under the property from the Seibel Farm, which sits just over the border in Beaver County. The board of supervisors voted unanimously to approve the deal…
Read More “Findlay Twp Signs Deal w/Range to Drill Under Town Park, $3K/Acre”
Range Resources, the very first driller to sink a Marcellus (back in 2004), released its second quarter 2017 results and held a conference call yesterday to discuss it. Range had a great 2Q17, with record production of close to 2 billion cubic feet per day (up 37% from 2Q16). Range’s Marcellus/Utica gas production was up 9% year over year. Range continues to drill impressive wells. One pad with seven wells drilled in the wet gas Marcellus area saw initial production (IP) rates averaging 29.1 million cubic feet equivalent per day (MMcfe/d), while a set of four wells on another pad in the Marcellus dry gas area say IP rates of 30.0 MMcfe/d. By the end of 2017, Range plans to have drilled and turned in line (TIL) 113 new wells in the Marcellus/Utica, and 56 new wells in the Louisiana Haynesville Shale. Yes, Range continues to ramp up its Haynesville program after buying Memorial Resource for $3.3 billion last year, spending money in Louisiana rather in Pennsylvania–which is a warning to the severance taxers in PA that companies can and will leave the state. On yesterday’s conference call Range CEO Jeff Ventura was asked a question about his views on Marcellus/Utica companies merging, like EQT/Rice. He responded: “If you think about it at a very high level, fewer companies I think in the Basin drilling is probably a positive thing. It’s probably a more pace development, a more prudent and more rational development. So I think that’s a good thing for the macro.” Range CFO Roger Manny hinted that Range may be looking to unload their considerable acreage position in northeastern PA when he responded this way to a question about more asset sales: “So we still have assets in the Mid-Continent that would be deemed non-core. One can make the case that the stuff we have in Northeast Pennsylvania, although it’s high quality, is away from that core blocky stacked pay position we have in the Southwest. So there’s other assets we have that we could sell.” Sounds like Range intends to concentrate on SWPA and LA moving forward…
Read More “Range Resources 2Q17 – Hints at Selling NE PA Marcellus”
In early April of this year the 2017 AAPG (American Association of Petroleum Geologists) Annual Convention & Exhibition was held in Houston, TX. During one of the sessions, William Zagorski and Taylor McClain delivered a talk called “Discovery of the Utica Shale: Update on an Evolving Giant.” The interesting thing is that Zagorski and McClain work for Range Resources–the first driller in the Marcellus, not the Utica. We don’t have a transcript of that talk, but we do have an abstract and the slide deck used during the talk (below). The slide deck is fascinating. It begins with a history of the Utica. Did you know that the earliest Utica discoveries were in Ontario, Canada? And that the earliest drilling done in the play here in the U.S. was done in Upstate New York–near the Watertown area? No, we didn’t realize that either. In fact, a large swath of the Utica Shale layer underlies New York State–what a pity we can’t explore it because of a corrupt dictator by the name of Andrew Cuomo. At any rate, below is the slide deck, with slides outlining where the “wet gas” and “dry gas” zones are in the Utica. And exploring how Ohio became synonymous with the term Utica Shale…
Read More “Update on “Evolving Giant” Utica Shale – from Range Resources”
What is a “super lateral” as opposed to a “long lateral” when it comes to shale drilling? And who is drilling these really long wells? That’s the topic of a recent post by energy expert Richard Zeits on the Seeking Alpha investors website. We’ll give you our definition. But first, some brief background. When you read about a “lateral” in shale wells, it refers to the part of the well that is horizontal. When drilling a new well, you first (of course) drill vertically–more or less straight up and down. But at a certain depth, when you hit the shale layer you are targeting, you gradually turn the hole so that it becomes horizontal, running through the rock layer (see the illustration). The horizontal part is the lateral. In the early days of Marcellus (and Utica) shale wells, laterals were perhaps a maximum of 2,000 feet in length. Today? The longest on-shore lateral in the world (all three of them, actually) are located in Ohio–drilled by Eclipse Resources. Eclipse’s wells–first the Purple Hayes, then the Great Scott and most recently the Outlaw–are considered “super laterals” because they exceed 15,000 feet. In the case of the Outlaw C 11H well in Guernsey County, OH, the lateral is a staggering 19,500 feet long (see Eclipse Breaks Record Again – New Longest Shale Well in World!). If we use the metric that a “super lateral” is 15,000 feet or longer, there is one Marcellus well that qualifies (see Range Resources Drills Longest Marcellus Well Ever – in Washington Co.). While Mr. Zeits doesn’t use the exact metric of 15,000 feet, he does talk about super laterals, and predicts they will soon become common. He notes some new news for us: Chesapeake Energy has drilled an Eagle Ford oil well with a 17,000 foot lateral. Zeits says we should expect to see this in other plays too. We found his musings over super laterals, and the economics behind them, interesting…
Read More “Utica Super Lateral Wells Now Catching on in Other Plays”